Tokyo, Osaka bourses merge operation under one holding company

Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. merged their operations under a new holding company established Tuesday to strengthen competitiveness against major bourses overseas in attracting new listings, transactions and investors.

The two bourses’ operations merged under Japan Exchange Group Inc. with their cash stock trading set to be integrated in July. Expanding their derivatives trading, to be consolidated at the OSE by March 2014, is expected to be a major challenge for the new company in the face of mergers by exchanges abroad and the growth of Asian bourses.

OSE President Michio Yoneda, who has become the holding firm’s chief operating officer, has said he will seek integration of commodities trading, even though Tokyo Commodity Exchange Inc. remains cautious about a merger with Japan Exchange Group.

U.S. derivatives exchanges have been aggressive in mergers and acquisitions, with the most recent development being IntercontinentalExchange Inc.’s bid to buy NYSE Euronext, an owner of the New York Stock Exchange, to take on its rival CME Group.

The OSE, Japan’s top derivatives exchange, has been increasing its product lineup on its own. In May, it listed index futures for the Dow Jones Industrial Average amid retail investors’ growing interest in foreign stocks.

But the Osaka bourse’s global market share in derivatives trading was 0.8 percent in 2011, ranking 16th and staying far below the 16.1 percent of the Korea Exchange.

Shares of the Japan Exchange Group will be listed on the TSE on Jan. 4 when the Tokyo stock market reopens.